Will Big, New Power Line Make Electricity Cheaper in Houston?

Electricity costs 10 percent more in Houston than in Dallas as calculated with data from the Texas Public Utility Commission. According to the offers listed on the commission’s “September Bill Comparison”, the average of rates charged by 11 different marketers for residential customers in Houston was $162 for a monthly usage of 1500 kWh. For Dallas, the cost was $148.

Is the difference caused in part by an unfair marketplace that keeps electric generators in North Texas from “importing” power into Houston, which would provide competition for the big, longtime Houston-based generator NRG? That’s the issue now under debate as a 150-mile-long transmission line project has been proposed by the Houston Import Project.

Supporters of the project say the industrial and residential growth in Houston makes it must to prevent shortages of electricity in coming years.

“It is the largest manufacturing area in the country,” testified lawyer Phillip Oldham at a hearing last month before the Texas Public Utility Commission. “And it’s growing; I don’t think there’s any dispute about that.”

The Houston Import Project would cost over a half-billion dollars and take four years to build. Houston’s Centerpoint Energy would head the project and company lawyer Tom Hudson said some projections show a critical need for electricity in Houston by the summer of 2018.

“We don’t have any extra time,” Hudson told the commission. “This project has to move forward.”

But does it? The power company that dominates electricity generation in Houston is NRG. It told the utility commission that the projections are flawed, that there’s no proven need for such a project whose cost would be passed on to consumers. A lawyer for NRG, Chris Reeder, suggested the state re-do its projections.

“It’s a $590 million transmission project. We feel that it’s vital it be studied properly,” Reeder testified.

But here’s where this gets interesting. Also at the hearing were lawyers for Luminant, the other big Texas power generator. Luminant is based in Dallas. The new line could mean Luminant could sell more of its electricity to where it’s needed down south in Houston.

Luminant lawyer Kirk Rasmussen said as things are now, there isn’t enough capacity on the existing north-south lines to do that, giving Houston-based NRG an unfair advantage to serve Houston in the Texas electricity market known as ERCOT.

“Luminant doesn’t want an unfair advantage. Luminant is asking for an opportunity to compete on equal footing in the ERCOT market,” Rasmussen testified.

He’s making a point that for years has been offered to explain why Houston pays more for electricity than Dallas: that is, that there aren’t enough lines to bring-in electricity from outside Houston. Supply doesn’t meet demand, meaning people in Houston pay more.

NRG doesn’t necessarily dispute that, but argued in an email to News 88.7 that lower prices that might be achieved by building the new line would be more than outweighed by the cost of the line.

FROM THE NRG EMAIL TO NEWS 88.7:

"There are certain times when transmission congestion causes a price difference in the cost of electricity in the Houston area, sometimes higher and sometimes lower, for short periods of time. On balance in the past the average has been higher on the Houston side. However, the question that must be asked is — is the $600 million cost of the Houston Import Project justified by the savings that may result from lower congestion costs? And, in the case of the Houston Import Project, the answer is no. "

The Houston Import Project is far from a done deal: it’s in the preliminary phases of the state's approval process.